Question

Bovic Inc. is a growing company with sales of $1.25 million this year. The company expects to grow at an annual rate of 25 percent for the next three years, followed by 20 percent per year for the next two years. What will be Bovic’s sales at the end of five years? (Round to the nearest percent.)

Answer 1

Answer:

Bovic’s sales at the end of five years will be = $3,515,625

Explanation:

Year 1 = ($1.250.000,00* 25%) = $1.562.500,00  

Year 2 = ($1.562.500,00* 25%) = $1.953.125,00

Year 3 = ($1.953.125,00* 25%) = $2.441.406,25

Year 4 = ($2.441.406,25* 20%) = $2.929.687,50  

Year 5 = ($2.929.687,50  * 20%) = $3.515.625,00  

Bovic’s sales at the end of five years will be = $3,515,625